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br /> across markets and privacy laws appear to be limiting parents' ability to consolidate processing. As far as depositors are concerned, there seems to be little value to having an account with a bank that operates in other countries, especially now that travelers can draw cash from networked automated transaction machines (ATMs). HSBC does have a service for wealthy individuals-HSBC Premier-that provides for such crossborder advantages as transfer of an individual's credit rating when they relocate, and some other services. However, these facilities are not available to ordinary accounts. The literature on trade flows is instructive here; the evidence on NAFTA has shown that borders have a substantial damping effect on trade flows (McCallum, 1995). In North America HSBC is even poorly positioned to take advantage of the one form of cross-border retail banking that is currently drawing attention: remittance flows from Mexican workers in the US. Although HSBC now has a strong presence in Mexico, it has almost no offices in California or other US states with large populations of Mexican immigrants.

By contrast, Bank of America, which is the largest bank in California and is present in many other US states, in 2002, bought a 25 percent stake in Santander-Serfin, Santander's subsidiary, which has amalgamated Mexico's oldest and third largest bank. If there is little reason to believe that HSBC benefits from cross-border demand or production effects, what is left as a source of advantage?

One candidate is what Kindleberger (1969) has called “surplus managerial resources.” When a bank such as HSBC can no longer grow at home, it may find itself with a management team that is underemployed in terms of the demands on its time. The bank may then choose to grow abroad when it can combine these surplus resources with what Berger et al. (2000) call a global advantage. Berger et al. argue that some US banks succeed in the competition with local banks elsewhere in the world simply by being better managed. In their survey of the literature on productivity, Bartelsman and Doms (2000) draw several stylized lessons, among them that firms differ in their productivity and that this difference may persist for years. Obviously, not all US banks necessarily partake of the advantage of better management and by contrast some non-US banks may. HSBC may simply be one of these. As Nachum et al. (2001) point out, the competitiveness of firms depends on the kind of assets that firms can transfer internally from country to country, but that are difficult to transfer from one firm to another, even within a country. Still, it is, unfortunately, extremely difficult to measure an intangible asset as subtle and hard to define as better management (Denrell, 2004), especially when, as recent events have shown, stock market performance or accounting measures are of doubtful reliability.

HSBC began its growth in North America by acquiring failed and weak banks. In effect, shareholders lacking a comparative advantage relative to HSBC, with respect to owning and governing given banks or branches (Lichtenberg and Siegel, 1987), sold them to HSBC. Generally, growth by acquisition is difficult to execute and as a strategy it is vulnerable to problems of over-reach due to managerial hubris (Roll, 1986; Baradwaj et al., 1992; Seth et al., 2000). Peek et al. (1999) found that generally the US subsidiaries of foreign banks have not done